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Selling Google, buying Baidu helps fund beat competitors

By Peter Woodifield (China Daily)
Updated: 2010-03-05 08:52

Scottish money managers' moves reflect shift in economic power

EDINBURGH: When Google Inc, owner of the most popular Internet search engine, said on Jan 12 it may close its website in China, Edinburgh money manager James Anderson sold the stock and bought Beijing-based rival Baidu Inc.

Since then, Baidu has risen 34 percent and Google has lost 8.5 percent. That kind of call helped propel Anderson's closed-end fund, Baillie Gifford & Co's 1.87 billion-pound ($2.8 billion) Scottish Mortgage Trust Plc, to the best performance among its UK peers over the past year.

Selling Google, buying Baidu helps fund beat competitors

A janitor cleans a metro station platform next to a Baidu.com Inc advertisement in Shanghai. Baidu shares have risen 34% since rival Google said on Jan 12 it may shut down its business in China. [Agencies]

"Google was admitting they had lost in China," said Anderson, who is Baillie Gifford's chief investment officer and responsible for 56 billion pounds in total. "It was revealing and added to the imputed value of Baidu."

Fund managers in the Scottish capital are increasingly moving their money to reflect the shift in economic power to countries such as China and Brazil from the US and Europe.

Scottish Mortgage has 60 percent of its assets in US, UK and other European stocks, down from 80 percent in 2004, and Anderson expects that to fall further.

The century-old Scottish Mortgage Trust's biggest holding is Rio de Janeiro-based Petroleo Brasileiro SA, Brazil's state-controlled oil producer, making up 5.1 percent of the fund. The firm, known as Petrobras, is also the biggest stake for Murray International Trust Plc, another Edinburgh fund.

"I like my ideas to come from the countries producing economic growth," said Anderson.

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